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Party receiving must transmit notice of dishonour

Section 95 of the Negotiable Instruments Act,1881.

Any party receiving notice of dishonour must, in order to render any prior party liable to himself, give notice of dishonour to such party within a reasonable time, unless such party otherwise receives due notice as provided by section 93.

It has already been observed that a notice given under section 93 by the holder or any other party to the dishonoured instrument enures to the benefit of all parties intermediate between the party giving the notice and the party to whom such notice is given. Therefore, where A, B, C, D are the indorsers of a bill of exchange of which E is the holder, a notice given by E the holder to A will enure to the benefit of B, C, D. But suppose E does not give notice of dishonour to A but contents himself by giving notice only to D to make him only liable. In such circumstances D who has a right of recourse against all prior parties will not be without a remedy under the terms of this section D can give a notice to C and C to B and so on. It is deemed prudent for each of the parties to give notice to all the parties prior to himself to avoid the risk arising out of omission to give, or out of any defect in a notice to a prior party. The time limit prescribed for the giving of notice by the holder has been extended to the prior parties, that is to say, just as the holder has to give notice to the prior parties within a reasonable time from the dishonour so each of the prior parties receiving such notice of dishonour shall give notice to the other prior parties within a reasonable time from the receipt of the notice of dishonour.

Created on 2021/02/26 07:03 by LawPage • Last modified on 2021/04/09 22:26 (external edit)